Many investors in North American oil and gas have likely heard of the Permian Basin in Texas and New Mexico. This prolific conventional oil field was once an ocean that existed in prehistoric times but has long since dried up. The area has become incredibly oil rich due to all the ocean life that was once there and which became oil over a period of millions of years. This has allowed the field to produce billions of barrels of oil since it was first tapped in the 1920s.

Despite this long history, the oil fields of the Permian Basin are still very much alive and active. In this article, we will discuss two companies that will help investors tap into the tremendous resource wealth that is still to be found in this area.

The first company that will be examined in this article is Linn Energy (LINEQ), an upstream publicly traded LLC that acts very much like a master limited partnership.

Rapid Permian expansion
Linn Energy first started operating in the Permian Basin in 2009 when the company purchased some properties in West Texas and Southeast New Mexico. Since that time, Linn Energy has expanded its operations in the Permian substantially. Today, Linn Energy has reserves of more than 160 million barrels of oil equivalent in the Permian spread out over more than 160,000 acres.

Source: Linn Energy

Most production is oil
Linn Energy operates a total of 2,233 rigs in the Permian and, here's the nice thing, about 80% of its 25,000 barrels per day of production is oil. This is good because even though natural gas prices have been strengthening since the beginning of 2012, they still remain severely depressed compared to their historic levels. Oil pricing, meanwhile, continues to be strong and this results in it being much more profitable to produce than natural gas. Thus, by focusing its resources on producing oil, Linn Energy is maximizing its profits.

Breitburn
Another company that moved into the Permian recently is upstream MLP Breitburn Energy Partners (BBEPQ). Breitburn first moved into the Permian back in 2012 via a $220 million acquisition of two properties in the region. At the time of the acquisition, these properties were producing approximately 2,100 barrels of oil equivalent per day from total reserves of 9.5 million barrels of oil equivalent.

From those humble beginnings, Breitburn has expanded its presence in the Permian shale substantially. The company's first purchase in the area was a total of 4,600 acres. Today, Breitburn has 18,013 acres containing 230 wells.

As Breitburn's acreage has expanded, so has its production. In 2013, Breitburn produced an average of 3,899 barrels of oil equivalent per day from its properties in the Permian. Its reserves in the Permian have also expanded with its acreage. At the end of 2013, Breitburn had total proved reserves of 40.9 million barrels of oil equivalent in the Permian Basin.

Source: Breitburn Energy

Focus is on oil but nowhere near as high as Linn's
As was the case with Linn Energy, the majority of Breitburn's production in the Permian is oil. However, the percentage of the company's production that is oil is nowhere near as high as it is for Linn. Over the course of 2013, approximately 55% of Breitburn's production in the Permain was oil and the remainder was either natural gas or natural gas liquids such as propane or butane. However, the partnership is still able to earn high profits from its operations in the Permian which it uses to make distributions to its unitholders.

As you can see, both Breitburn and Linn Energy have been rapidly expanding in the Permian Basin. The addition of conventional production from these properties should provide cash flow that will help both companies maintain their high distributions.